| 1. We have audited the accompanying financial statements of MARMAGOA
STEEL LIMITED ("the Company"), which comprise the Balance Sheet asDat
31st March 2015, the Statement of Profit and Loss, and the Cash Flow
Statement for the year ended and a summary of significant accounting
policies and other explanatory information.
Management's Responsibility for the Financial Statements:
2. The management and Board of Directors of the Company are
responsible for the matters stated in Section 134(5) of the Companies
Act, 2013 ('the Act') with respect to the preparation of these
financial statements that give a true and fair view of the financial
position and financial performance of the Company in accordance with
the Accounting Principles generally accepted in India, including the
Accounting Standards specified underSection 133 of the Act, read with
rule 7 of the Companies (Accounts) Rules 2014. This responsibility
includes maintenance of adequate accounting records in accordance with
the provisions of the Act for safeguarding the assets of the Company
and for preventing and detecting frauds and other irregularities;
selection and application of appropriate accounting policies; making
judgments and estimates that are reasonable and prudent; design,
implementation and maintenance of adequate internal financial controls,
that are operating effectively for ensuring the accuracy and
completeness of the accounting records, relevant to the preparation and
presentation of the financial statements that give a true and fair view
and are free from material misstatement, whether due to fraud or error.
Auditors' Responsibility:
3. Our responsibility is to express an opinion on these financial
statements based on our audit. We have taken into account the
provisions of the Act, the accounting and auditing standards and
matters which are required to be included in the audit report under the
provisions of the Act and the Rules made thereunder. We conducted our
audit in accordance with the Standards on Auditing specified under
Section 143(10) of the Act. Those standards require that we comply with
ethical requirements and plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free
from material misstatement.
4. An audit involves performing procedures to obtain audit evidence about
the amounts and disclosures in the financial statements. The procedures
selected depend on the auditor's judgment, including the assessment of
the risks of material misstatement of the financial statements, whether
due to fraud or error. In making those risk assessments, the auditor
considers internal financialcontrol relevant to the Company's
preparation of the financial statements, that give a true and fair view,
in order to design audit procedures that are appropriate in the
circumstances, but not for the purpose of expressing an opinion on
whether the Company has in place an adequate internal financial controls
system over financial reporting and the operating effectiveness of such
controls. An audit also includes evaluating the appropriateness of
accounting policies used and the reasonableness of the accounting
estimates made by the Company's Management and Board of Directors, as
well as evaluating the overall presentation of the financial statements.
5. We believe that the audit evidence we have obtained is sufficient
and appropriate to provide a basis for our audit opinion.
Opinion:
6. We have been informed by the company that the production activities
have been suspended since June 2013 for want of Working Capital Support
from the Banks, consequent upon the company's loans which have been
classified as NPA by both the Bank of Maharashtra and the Union Bank of
India. As a result, there is no generation of cash flows even to meet
the day to day expenses. However,pending finalization of
rehabilitation plan the accounts have been prepared on a going concern
basis.
Subject to this, in our opinion and to the best of our information and
according to the explanations given to us, the aforesaid financial
statements read together with the Notes thereon, give the information
required by the Act in the manner so required and give a true and fair
view in conformity with the accounting principles generally accepted in
India:
i) In the case of the Balance Sheet, of the state of affairs of the
Company as at 31st March 2015.
ii) In the case of the Statement of Profit & Loss, of the Losses for
the year ended 31st March 2015 and
iii) In the case of the Cash Flow Statement, of the Cash Flows during
the year ended that date in the functioning of the Company.
Report on other Legal and Regulatory requirements:
7. As required by the Companies (Auditor's Report) Order, 2015 ("the
Order") issued by the Central Government of India in terms of sub-
section (11) of Section 143 of the Act, we give below a statement on
the matters specified in paragraphs 3 and 4 of the Order.
i. (a) The Company has maintained proper records in electronic medium
showing full particulars including quantitative details and situation
of fixed assets.
(b) As represented to us in writing, the company has made a policy of
verifying physically, the fixed assets in a block of two years. During
the period, there has been no physical verification of the fixed
assets.
ii. (a) We have been informed thatin the absence of production, no
physicalverification has been done of inventory. Under these
circumstances, periodical physical verification was not considered
necessary.
(b) The procedures of physical verification of inventory followed by
the management are reasonable but not adequate in relation to the size
of the Company and the nature of its business, since the inventory was
not completely verified physically.
(c) In our opinion and according to the information and as per the
explanations given to us, the Company is maintaining proper records of
inventory. The actual stock of physical verification was done only
after the shutdown of manufacturing operation in May 2013. In the
absence of physical verification of items of inventory, the question of
dealing with the discrepancy in the book stock does not arise.
iii. (a) The company had granted during the year 2012-13 an interest
free loan to a company covered under Section 189 of the Companies Act.
No such loans were granted to any firm or other party covered under
Section 189 of the Companies Act. Balance at the end of the year was
Rs. 52.52 Lakhs.
(b) No interest has been charged to the borrower. We have been informed
that the said advance was made to the holding company of Marmagoa Steel
Limited, out of the interest free loan received from another company
with which there were no terms and conditions attached regarding
repayment of the principal.
(c) Since no specific terms were attached regarding repayment of the
principal, the question of overdue loans does not arise.
iv. In our opinion and according to the information and as per the
explanations given to us, there is an adequate internal control system
in the company commensurate with its size and the nature of its
business for the purchase of inventory and fixed assets and for the
sale of goods. There were no services rendered by the company. During
the course of our audit, we did not come across any continuing failure
to correct any major weaknesses in the internal control system
prevailing in the Company.
v. In our opinion and according to the information and as per the
explanations given to us, the Company has neither accepted deposits
from the public during the year under consideration nor has the Company
Law Board or National Company Law Tribunal or Reserve Bank of India or
any court or any other Tribunal have passed any orders against the
Company for any contravention under Sections 73 & 74 or any other
provisions of the Companies Act.
vi. The Central Government has prescribed maintenance of cost records
under Section 209(1)(d) of the Companies Act, 1956, for the products of
the Company. We have broadly reviewed the books of account maintained by
the Company pursuant to the order made under the said Section and are of
the opinion that prima-facie; the Company has maintained the prescribed
accounts and records.
vii(a) In our opinion and according to the information and as per the
explanations given to us, during the year, the Company was not regular
in depositing undisputed statutory dues including Provident Fund,
Employees' State Insurance, VAT, Income Tax and Service Tax. However,
in the payment of Customs duty, Excise duty, cess and Wealth tax the
company was regular in depositing undisputed dues with the appropriate
authorities. As on 31st March 2015, a sum of Rs. 840.57 lakhs of tax
was outstanding for a period of more than six months from the date they
became payable comprising of the following -
(b) Statutory Dues Rs. In Forum where
Lakhs Dispute
pending
EPF - Employers PF
Contribution (MSL) 11.37 commissioner
ESI - Employers
Contribution (MSL) 4.30
PF Contribution PF
(Contractors) 1.57 commissioner
Service Tax 30.75
Income Tax - TDS 63.60
Entry Tax 5.97
Central Sales Tax 430.61
VAT of various states 292.40
Total 840.57
(c ) There has not been an occasion in case of the Company during the
year under report to transfer any sums to the Investor Education and
Protection Fund. The question of delay in transferring such sums does
not arise.
viii. The company has accumulated losses at the end of the year which
are more than 50% of its net worth. The Company has incurred cash losses
during the current financial year and during the immediately preceding
financial year.
ix. In our opinion and according to the information and as per the
explanations given to us, the Company has defaulted in the repayment of
dues to their Bankers viz., Bank of Maharashtra, Margao Branch and
Union Bank of India, Panjim Branch who have invoked the provisions of
SARFAESI Act, 2002 and also assigned the respective debts in favour of
Asset Reconstruction Companies; Pridhvi Asset Reconstruction and
Securitisation Company Ltd., Hyderabad and Asset Reconstruction Company
(India) Ltd. respectively. We have been informed that negotiations are
in progress with both the ARCs for arriving at a negotiated settlement
of dues.
x. In our opinion and to the best of our information and as per the
explanations given to us and as per the records of the Company, the
Company has not given any guarantee for loans taken by others from
Banks or Financial Institutions.
xi. In our opinion and to the best of our information and as per the
records of the Company, no Term Loans were borrowed during the period
under consideration for any specific purpose.
xii. During the course of our audit, we have neither come across any
frauds on or by the Company nor has the same been reported to us by the
management.
8. As required by section 143(3) of the Act, we further report that:
a) we have sought and obtained all the information and explanations
which to the best of our knowledge and belief were necessary for the
purpose of our audit;
b) in our opinion proper books of account as required by law have been
kept by the Company so far as appears from our examination of those
books;
c) the Balance Sheet, Statement of Profit and Loss and Cash Flow
statement dealt with by this Report are in agreement with the books of
account;
d) in our opinion, the aforesaid financial statements comply with the
applicable Accounting Standards specified under Section 133 of the Act,
read with Rule 7 of the Companies (Accounts) Rules 2014
e) on the basis of written representations received from the directors
as on March 31,2015, and taken on record by the Board of Directors, none
of the directors is disqualified as on March 31,2015, from being
appointed as a director in terms of Section 164(2) of the Act
f) In our opinion and to the best of our information and according to
the explanations given to us, we report as under with respect to other
matters to be included in the Auditor's Report in accordance with Rule
11 of the Companies (Audit and Auditors) Rules, 2014:
i. The pending litigations which would impact the financial position
of the Company is given at Note 32 of the Notes to financial statements
ii. The Company did not have any long-term contracts including
derivative contracts; as such the question of commenting on any
material foreseeable losses thereon does not arise
iii. There has not been an occasion in case of the Company during the
year under report to transfer any sums to the Investor Education and
Protection Fund. The question of delay in transferring such sums does
not arise.
For N.D.HEGDE & ASSOCIATES,
Chartered Accountants
(ICAI Firm Reg.No.103616W)
NAGESH D. HEGDE
Membership No.: 041345
Place: Curtorim
Date:17.07.2015
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